New Economic Warrior in town to resolve SL’s crippled Economy amidst COVID-19

New Economic Warrior in town to resolve SL’s crippled Economy amidst COVID-19

14 July 2020 02:38 pm

We met again Mr. Vincent Mervyn Fernando, a veteran economic analyst, who previously delivered us a thorough analysis on Sri Lanka being downgraded from an upper-middle-income country (as designated by the World Bank on July, 2018) to a lower-middle-income country on the basis of per capita income in 2019, on learning whether we can actually revive our melted down economy. We invited him for discussion not only because he served as a senior economic specialist and a former director of the Central Bank of Sri Lanka for over thirty years, conducted lessons on Economics as an external lecturer to the students of the University of Sri Jayawardenapura, or improved knowledge of the children of this country by publishing 65 books on Economy and Management, but also as we have witnessed in the first section of the June 2020 issue of ‘Business News’ that he was appointed as a senior adviser to a brand new association known as ‘Colombo Business Association.’

We below law down the detailed answers given by Mr. Vincent Mervyn Fernando on Colombo Business Association as its senior adviser.

Can you elaborate us first on the vision, mission and objectives of Colombo Business Association that came forth for the revival of the broken economy of Sri Lanka amidst the COVID-19 crisis that devastated the global economy?

Before making an entry to the introduction, I should be conveying my sincerest thanks to Mr. Jayasiri Munasinghe of ‘Dinamina’ newspaper and Mr. Chaminda Vidanagame, Secretary-General of the Association, who played a great role in getting me appointed as a senior adviser to the honorary advisory board of the Association. In this regard, I took participation in the Association’s committee meeting held at the auditorium of the Nawaloka Hospital, Colombo on June 15, 2020 and learned their the Future CBA Plans for Two Years 2020 – 2022 and I learned more about the Association by attending to its Annual General Meeting held at Kingsbury Hotel, Colombo on June 26, 2020.

Global estimations indicate that the gross domestic product of the World is -4.9% and the growth rate of Sri Lanka is negative in 2020 amidst the COVID-19 crisis. Every country that keeps trade ties with Sri Lanka including the United States, the 27 states of the European Union, China and India, has a growth rate from -1% to -6% within the first quarter of 2020, at a likeliness to indicate a negative value in the annual growth rate as well.  But in Sri Lanka, the Census Department is far from producing the figures of the first quarter of the year. The growth rate, according to our observation, may likely to toss between -2% and -3%. Being designated as an upper-middle income country in 2018 after 21 years, the economy of Sri Lanka managed to keep its rank for a while, only to be downgraded to a lower-middle income country by the World Bank, as the per capita income was dropped by US$ 227 in 2019, the last year of the Good Governance Government. In saving the fallen country, Mr. Gotabaya Rajapaksa was elected as President with his ‘Vision for Prosperity.’   

However, the country was further drained amidst the COVID-19 crisis against all plans for the economic revival. The gratitude for controlling the contagion by limiting to only 11 deaths, when a hundred thousand are killed by the pandemic, should be given to the President, the Prime Minister and the relevant sectors. But saving the country from the economic disaster has been quite difficult. Even if a two-thirds majority is secured in the upcoming general election, the President and the new government would have to face the vicious challenge of recovering the country in the means of the economy against a crippled world economy. In the midst of this most unfortunate situation, Colombo Business Association has proudly come forth as the new ‘Economic Warrior’ to rescue the country’s economy. Without bidding the will of any political party, the Colombo Business Association has been established in the business centre of Sri Lanka, Colombo, as a prominent non-profit business association prepared to obtain blessings of all governments and leaders in serving the economy. As of the present, there are 265,000 members representing 41 subsidiary associations to the parent association. Among them are many business associations linked to industries, production, and service sectors. Thus, the association is also comprised of international members as well. The main Objective of this association is to support nurture and direct the business community in Sri Lanka to face challenges of ever evolving business climate. Its main Vision  would be enhancing and improving the business environment and advocacy for our Affiliated Trade Associations and Members,providing business services and member benefits for the associates and work for the betterment and development of the mother nation through entrepreneurship development. The main mission of The Colombo Business Association is a Premier Business Association  of Business and affiliated associations and other interested parties. CBA works to enhance and improve business environment,advocacy for our   Affiliated Trade Associations and Members in addressing business related issues with legislators and policy makers of the government of Sri Lanka and Diplomatic Missions of foreign countries and protecting the rights of businessmen, and assisting businesses to improve their sales and profits by providing training and assistance. 

You earlier mentioned that this Colombo Business Association is the latest member to join the battalion of Ground, Health and Expatriate Warriors as an ‘Economic Warrior’. What are the types of resolutions the Colombo Business Association provides in reawakening the crippled Economy?

With a unique objective, a vision, and a mission, this Association adopted and approved a "New Prosperity Series" to revive the economy for the next two years (2020-2022) at its Committee Meeting held on 15 June 2020 at the Nawaloka Hospital Auditorium, Colombo. They can be demonstrated as follows;

1. Entrepreneurship through traditional agriculture

By the end of 2019, 2.1 million of Sri Lanka's 8.2 million working population, or 25% of the total employment, will be employed in the agricultural sector. There are 16 activities related to agro-economic activities. (Eg Paddy crops, Vegetable crops, Fruit crops, Forest crops, etc.)

Although a large number of people are employed, in 2019 the output added to the country's GDP was less than 7%. That is, the productivity of one agricultural inventor is less than 0.3. Agricultural exports accounted for 21% of the total exports by the end of 2019. The Government's focus on rebuilding the economy with Covid 19 is focused on promoting indigenous agriculture at a time when the first economic planning proposal of the Colombo Business Association is the need to incorporate entrepreneurial knowledge and technology into traditional agriculture in Sri Lanka.

I hope this will alleviate the foreign exchange crisis facing the country today and the problem of depreciation of the foreign exchange rate. 

2. Introduction of Business E - Identity card to local entrepreneurs.

The value of monetary transactions in Sri Lanka by 2019 is Rs. 7624 billion. 133,810 billion worth of payment and settlement transactions in Sri Lanka. That is 95% of the total payments in Sri Lanka are made electronically. Realizing this, our Association (CBA) has introduced such a Business Identity Card (EIC) and CBA Benefit Card to facilitate the Sri Lankan business and entrepreneurial community to transact at home or abroad. It is hoped that the entrepreneurial and business sector, along with the public sector and the foreign sector, will give the Sri Lankan business class some recognition and help promote the country's marketing and revitalize the Covid economy.

3. Holding SAARC Trade Fair

By the end of 2019, 56% of Sri Lanka's preferential trade exports were to Europe under the GSP + system. 27% happened with the US under GSP. However, the introduction of SAARC trade shows by the CBA Association at this time is a necessity of the era.

Under this, the new proposal to hold a trade fair in South Asian countries once or twice a year, including all Sri Lankan products, will also help boost Sri Lanka's export earnings, reduce foreign debt and strengthen foreign exchange by boosting Sri Lanka's export earnings due to COVID 19.

4. Remedy for Tourism Development Due to Covid 19 Challenge - Elderly Care Tourism

Sri Lanka's tourism earnings in 2018 were $ 4381 million, decreased by $ 3607 million in the terrorist attack on Easter Sunday. Tourism earnings in Sri Lanka were completely lost due to Covid 19. To meet this challenge, the CBA decided to introduce a system of Ayurveda, indigenous food, meditation and insurance to long-term travelers in our country. The Elderly Care Tourism proposal, which is aimed at boosting the tourism industry by deciding, is a great one.

5. Promote Value Addition in Country's Local Product and 6. Promoting the Made in Sri Lanka Brand.

The total value of Sri Lanka's total imports in 2019 was Rs. 20,000 billion. Of that, 1,400 billion is rice, sugar, milk, dhal and sweets. 3000 billion is in textiles. Many other things can be produced by attracting foreign investors. Thus most of what can be produced locally is imported and we spend twice as much on imports as our export earnings. With this in mind, CBA not only reinforces local products but also develops new ways to efficiently and effectively produce the products under the brand name Made in Sri Lanka. The CBA's next two proposals are to work to boost declining economic growth.

7. Carrying out Awareness Program all around districts by hosting island-wide workshops, seminars and guidance to educate current and future participants in all districts on the services available (licensing, EPF services, ETF service registrations) from government agencies is a fine suggestion. That's because it recognizes that "information" is an important resource for the business world

8.Joining the CBA Ministry of Education to impart the new entrepreneurial knowledge needed to create new local businesses from school age to the future of the country

School children in this country often receive only "knowledge". It's not enough. They also need to be given the entrepreneurial knowledge needed to earn "wealth".

You have to give it the energy it needs to create something new. This is evident from the government's move to give a special place to those who invent these inventions with the Covid 19 epidemic.

9. Introduction of foreign business bank loans

One of the major problems faced by local entrepreneurs and entrepreneurs due to Covid 19 was the availability of working capital loans at 4% lower interest rates and the reluctance of banks to repay and repay existing business loans and lease loans.

The President also publicly reprimanded the Central Bank for not carrying out the relevant activities properly. We also hear that the Central Bank has taken a policy decision to reduce the fixed deposit rate to 4.5% and the fixed deposit rate to 5.5% with effect from June 10, 2020. Through this, we can see that the final resolution of the CBA is also showing signs of progress.

With the support of the President and the incumbent government in implementing the nine proposals introduced through the CBA, the Colombo Business Association will win a reputation as the heroic economic institution that built the Sri Lankan economy that has fallen into disrepair due to Covid 19. If so, it will be a great honor for me, the adviser and the officers, and we will be among the heroes who saved the economy.